Pensions

[quote]
Commercial pension funds aren't safe. One good friend saved for a couple of decades with Equitable Life. After their demise, he started another pension with another provider that seemed equally reputable and he's worried again.
State run pension funds are safe for the moment, but for how long?
[/quote]
Rubbish!!! Pensions are protected by the pension protection act and are overseen by TPS. Equitable Life folded because they made promises they couldn't keep, the funds are still there.
Funny how it's always a third party who always has problems.

Quote:
Commercial pension funds aren't safe. One good friend saved for a couple of decades with Equitable Life. After their demise, he started another pension with another provider that seemed equally reputable and he's worried again.

State run pension funds are safe for the moment, but for how long?

Rubbish!!! Pensions are protected by the pension protection act and are overseen by TPS. Equitable Life folded because they made promises they couldn't keep, the funds are still there.

You can find some of the best advice regarding pensions on your Government website. You are getting free advice that is not influenced by the self interests of a private investment consultant. Pete is right, arm yourself with enough knowledge to be able to ask the right questions when you do see a professional, and also enough insight to know when the info received is for your benefit, or the benefit of the company giving the advice. If I understand correctly, you are asking about a government funded retirement program; if so, start investing now; you have as much chance of ensuring a comfortable retirement privately as you do of winning the lotto. To start with, are you disciplined enough to contribute regularly to a self-administered plan? If you're young, and like most people, there will always be something more pressing at the time on which to spend the intended investment funds. This is not to say you're not intelligent enough to handle your money, but it is going by very reliable statistics; people just keep putting off till tomorrow, it's human nature. Commit now to a long term guaranteed plan, as guaranteed as one can get these days.
I can tell you about many sad cases concerning friends and aquintances of mine where they virtually ruined their golden years by trying to get around the tried and true system. I have one aquaintance who thought he was fooling the government tax man all his life. He had his own business, and didn't report his revenues faithfully, and kept the tax money. He was doing so much better than his contemporaries, he thought. Contributions to the government pension plan are based on one's income, so where he wasn't reporting any income, he wasn't contributing to the plan. Several years ago he turned 65 and got his statement from the government pension plan; for the rest of his life he would receive a pension of $85.00 per month. Needless to say, he's still working, and he's in his seventies.
Do it now, and do it right, and retire early with a comfortable income. Most of the info you need is available free of charge from your government.

You can find some of the best advice regarding pensions on your Government website. You are getting free advice that is not influenced by the self interests of a private investment consultant. Pete is right, arm yourself with enough knowledge to be able to ask the right questions when you do see a professional, and also enough insight to know when the info received is for your benefit, or the benefit of the company giving the advice. If I understand correctly, you are asking about a government funded retirement program; if so, start investing now; you have as much chance of ensuring a comfortable retirement privately as you do of winning the lotto. To start with, are you disciplined enough to contribute regularly to a self-administered plan? If you're young, and like most people, there will always be something more pressing at the time on which to spend the intended investment funds. This is not to say you're not intelligent enough to handle your money, but it is going by very reliable statistics; people just keep putting off till tomorrow, it's human nature. Commit now to a long term guaranteed plan, as guaranteed as one can get these days.

I can tell you about many sad cases concerning friends and aquintances of mine where they virtually ruined their golden years by trying to get around the tried and true system. I have one aquaintance who thought he was fooling the government tax man all his life. He had his own business, and didn't report his revenues faithfully, and kept the tax money. He was doing so much better than his contemporaries, he thought. Contributions to the government pension plan are based on one's income, so where he wasn't reporting any income, he wasn't contributing to the plan. Several years ago he turned 65 and got his statement from the government pension plan; for the rest of his life he would receive a pension of $85.00 per month. Needless to say, he's still working, and he's in his seventies.

Do it now, and do it right, and retire early with a comfortable income. Most of the info you need is available free of charge from your government.

[quote]Commercial pension funds aren't safe. One good friend saved for a couple of decades with Equitable Life. After their demise, he started another pension with another provider that seemed equally reputable and he's worried again.
Rubbish!!! Pensions are protected by the pension protection act and are overseen by TPS. Equitable Life folded because they made promises they couldn't keep, the funds are still there.
Funny how it's always a third party who always has problems.[/quote]
I'll pass this comments on to my friend. How is he able to get his money?

Quote:Commercial pension funds aren't safe. One good friend saved for a couple of decades with Equitable Life. After their demise, he started another pension with another provider that seemed equally reputable and he's worried again.

Rubbish!!! Pensions are protected by the pension protection act and are overseen by TPS. Equitable Life folded because they made promises they couldn't keep, the funds are still there.

Funny how it's always a third party who always has problems.

I'll pass this comments on to my friend. How is he able to get his money?

Many thanks for all the info guys.....lots to think about.
A basic question is this, If I retire tomorrow with a pension of £50pw and a state pension of £100pw do I end up with £150pw pension? or will I get a state pension of £50pw made up to £100pw by my own pension?
The reason I'm asking is that I have a pension that will pay out at age 57 which is 10 years from now on which I can take a lump sum...can I start a new pension at this age (46) and make it pay and cash in my old one in 10 years?

Many thanks for all the info guys.....lots to think about.
A basic question is this, If I retire tomorrow with a pension of £50pw and a state pension of £100pw do I end up with £150pw pension? or will I get a state pension of £50pw made up to £100pw by my own pension?

The reason I'm asking is that I have a pension that will pay out at age 57 which is 10 years from now on which I can take a lump sum...can I start a new pension at this age (46) and make it pay and cash in my old one in 10 years?

Your state pension is paid independently of your private pension.
If you exceed the earnings limit then you pay tax on the excess and over a certain sum they start deducting from your personal allowance as well (but I don't think you will be earning enough to have your personal allowance reduced, which I do - just checked [link=http://www.hmrc.gov.uk/incometax/personal-allow.htm]here[/link] you wont :) )

Your state pension is paid independently of your private pension.

If you exceed the earnings limit then you pay tax on the excess and over a certain sum they start deducting from your personal allowance as well (but I don't think you will be earning enough to have your personal allowance reduced, which I do - just checked here you wont )

The older I get and the more dealings I have to have with "professionals" the more sceptical I get! Give me a keen amateur any day of the week! After all, wasn't it professional who got us in to this current financial mess!!!

The older I get and the more dealings I have to have with "professionals" the more sceptical I get! Give me a keen amateur any day of the week! After all, wasn't it professional who got us in to this current financial mess!!!

Not everyone gets a full state pension, especially those who spent many years bringing up children.
After we bought all possible extra pension credits, my wife's state pension almost exactly covers our Council tax.

Not everyone gets a full state pension, especially those who spent many years bringing up children.

After we bought all possible extra pension credits, my wife's state pension almost exactly covers our Council tax.

[quote]Not everyone gets a full state pension, especially those who spent many years bringing up children.
After we bought all possible extra pension credits, my wife's state pension almost exactly covers our Council tax.[/quote]Didn't she qualify under your contributions?

Quote:Not everyone gets a full state pension, especially those who spent many years bringing up children.

After we bought all possible extra pension credits, my wife's state pension almost exactly covers our Council tax.Didn't she qualify under your contributions?

[quote]Not everyone gets a full state pension, especially those who spent many years bringing up children. [/quote]
Not quite correct. Whist you are bringing up children and claiming Family Allowance (old name) you are credited with a full stamp for the period.
[quote]my wife's state pension almost exactly covers our Council tax.[/quote]
Thats probably true for most people.

Quote:Not everyone gets a full state pension, especially those who spent many years bringing up children.

Not quite correct. Whist you are bringing up children and claiming Family Allowance (old name) you are credited with a full stamp for the period.

[quote]So say that I pay in £40pm and after 20 odd years[/quote]
That will equate to about £12,000 pension pot in the end which will give you approx a pension of about £500 per annum. To achieve any reasonable pension in retirement you need to build up a pension pot of around £300,000 plus over your working lifetime.
Caviat - these numbers are approximate but are realistic.

Quote:So say that I pay in £40pm and after 20 odd years

That will equate to about £12,000 pension pot in the end which will give you approx a pension of about £500 per annum. To achieve any reasonable pension in retirement you need to build up a pension pot of around £300,000 plus over your working lifetime.

Hi of course you need to seek professional advice but if it helps here is how I look at it.
The new pension scheme contributions are made before tax (and if it is done by salary sacrifice you reduce the national insurance contribution). Also your employer is putting money in. On this scheme the money going in is bigger than what is coming out of my pocket. Now what the NI and tax means etc depends on how much you earn, but if you were on 20% tax rate and your employer matches your contributions you could think of it this way.
For every £1 put into your pension pot you loose £0.50 from your pre-tax wages. So if you think of after tax pay, for every £1 put in your pension you give up £0.40 of take home pay. If they do it by salary sacrifice it will be a bit less and if you pay 40% tax even less. Assuming your employer matches your contribution. It varies upon your income and the scheme hence the advice to check to an expert to get all the numbers that is more to give you a ball park. Plus if you are getting close to getting child credits taxed putting money into the pension also takes away from the income for that assessment.
The next problem is most of these schemes may well result in a level of pensions saving that is lower than you might like. So you may need to think about putting in more of your salary. But if you pay 20% tax and you have run out of pension match from your employer you may want to think about using a stocks and shares ISA. This is of course risky, but the advantages are;
- once the money is in the ISA it is yours to spend at any point in your life and you do not have to buy an annuity with it
- Interest is tax free and you do not pay tax on getting it out (once your pension goes past a certain level it will be taxed)
- You can run multiple policies and split your risks across companies or run different risk levels
So it may be you want to run a balanced policy of investments that are not taxed as you get them out and also taxed as you save. My personal decision is to make my pensions savings a bit bigger than the percentage matched by my employer and also to save some money in stocks and shares ISAs. I did see an IFA and I think his advice was legit and straight and I understood it but, everything has risk, laws will change on taxes and pensions etc plus the only time you know it works is when you retire and itís a bit late then
That is my decision good luck on yours.

Hi of course you need to seek professional advice but if it helps here is how I look at it.

The new pension scheme contributions are made before tax (and if it is done by salary sacrifice you reduce the national insurance contribution). Also your employer is putting money in. On this scheme the money going in is bigger than what is coming out of my pocket. Now what the NI and tax means etc depends on how much you earn, but if you were on 20% tax rate and your employer matches your contributions you could think of it this way.

For every £1 put into your pension pot you loose £0.50 from your pre-tax wages. So if you think of after tax pay, for every £1 put in your pension you give up £0.40 of take home pay. If they do it by salary sacrifice it will be a bit less and if you pay 40% tax even less. Assuming your employer matches your contribution. It varies upon your income and the scheme hence the advice to check to an expert to get all the numbers that is more to give you a ball park. Plus if you are getting close to getting child credits taxed putting money into the pension also takes away from the income for that assessment.

The next problem is most of these schemes may well result in a level of pensions saving that is lower than you might like. So you may need to think about putting in more of your salary. But if you pay 20% tax and you have run out of pension match from your employer you may want to think about using a stocks and shares ISA. This is of course risky, but the advantages are;
- once the money is in the ISA it is yours to spend at any point in your life and you do not have to buy an annuity with it
- Interest is tax free and you do not pay tax on getting it out (once your pension goes past a certain level it will be taxed)
- You can run multiple policies and split your risks across companies or run different risk levels

So it may be you want to run a balanced policy of investments that are not taxed as you get them out and also taxed as you save. My personal decision is to make my pensions savings a bit bigger than the percentage matched by my employer and also to save some money in stocks and shares ISAs. I did see an IFA and I think his advice was legit and straight and I understood it but, everything has risk, laws will change on taxes and pensions etc plus the only time you know it works is when you retire and itís a bit late then